A strong underwriting performance in both P&C and L&H reinsurance contributed to significantly improved net income for the first nine months of 2023 for Swiss Re, as the return on equity (ROE) rose to 25.9% for the period.
Group-wide, net income rose to $2.5 billion for 9M 2023 compared with a loss of $285 million a year earlier.
Net premiums earned and fee income increased more than 4% to $33.7 billion, while the return on investments of 3.5% improved from 1.6% in the prior-year period.
The stronger performance was supported by Swiss Re’s P&C reinsurance business, which reported net profit of $1.5 billion for 9M 2023, compared with a loss of $283 million in 9M 2022. Swiss Re highlights a robust underwriting performance and successful renewals and rising investment income as the drivers.
For 9M 2023, the P&C combined ratio strengthened to 94.3% from 106.1%, and for the third quarter of 2023, the segment’s combined ratio fell to 93.7%, in spite of the high level of industry nat cat losses.
For Swiss Re, large nat cat claims hit $1.1 billion in 9M 2023, so down from the $2.5 billion seen in 9M 2022. Of this, Swiss Re says that $421 million is attributed to the third quarter, mainly related to severe weather events in Europe, wildfires in Hawaii, and the Morocco earthquake.
P&C reinsurance also absorbed negative prior-year developments of $151 million, reflecting significant additions to US liability reserves, the majority of which were assumption-driven.
Net premiums earned within the P&C business rose to $17.4 billion from $16.6 billion in 2022.
The global reinsurer’s L&H reinsurance division has also performed well in 2023, with net income of $634 million for the nine month period, compared with $221 million a year earlier, driven by a reduction in mortality claims related to COVID-19.
According to Swiss Re, elevated large individual claims were offset by a strong investment result. Net premiums earned and fee income increased to $11.7 billion in the first nine months of 2023, compared with $11.2 billion in the prior- year period.
For the full-year 2023, Swiss Re says that L&H reinsurance continues to target net income of around $900 million.
“Swiss Re’s performance in the first nine months of 2023 is the result of our continued focus on underwriting quality. This has enabled us to navigate a heightened risk environment that continues to be characterized by significant loss events for the insurance industry,” said Group Chief Executive Officer, Christian Mumenthaler.
Group Chief Financial Officer, John Dacey, added: “With interest rates continuing to rise, we see improvements in the recurring income yield and in our overall investment results. Combined with the improved underwriting performance, this has significantly strengthened the Group’s earnings capacity.”
Turning to Swiss Re Corporate Solutions, net income rose from $356 million in 9M 2022 to $492 million in 9M 2023, which Swiss Re attributes to a continued strong underlying business performance, complemented by lower-than-expected large nat cat losses, and a higher investment result.
Large man-made losses totaled $153 million, and losses from nat cats reached $86 million in 9M 2023, which is down on the prior-year period for both, which included a significant reserve for the war in Ukraine.
Net premiums earned fell slightly from $4.1 billion to $4 billion in the first nine months of 2023, reflecting the partial sale of the elipsLife business in mid-2022.
The Corporate Solutions combined ratio strengthened to 91.3% from 93.1% in the prior-year nine month period.
Swiss Re has also provided an update on its digital B2B2C insurer, iptiQ, which achieved accelerated growth in the third quarter with gross premium written of $771 million in 9M 2023, compared with $650 million a year earlier. The business now has more than 2.3 million policies in-force.
“In light of the good performance year to date, we maintain our targets for the full year including a Group net income of more than USD 3 billion. We continue to focus on our disciplined underwriting strategy that provides a strong base for the future,” said Mumenthaler.